WSJ: Chilean Mining Rescue Somehow Victory for Capitalism

October 15, 2010

The Wall Street Journal's Daniel Henninger would like to interrupt your viewing of the Chilean miner rescue with a declaration:

It needs to be said. The rescue of the Chilean miners is a smashing victory for free-market capitalism.

Hoo boy. Now, Henninger is the deputy page editor of an editorial board that has bashed Rahm Emanuel for saying "never allow a crisis go to waste." (The board forgot, one assumes, their utterly disgraceful editorial from eight days after 9/11, in which they asked President Bush to use the post-attacks political situation to push through tax cuts and free trade agreements.) I guess, though, Henninger now has a crisis he can use. But let's hear him out:

If those miners had been trapped a half-mile down like this 25 years ago anywhere on earth, they would be dead. What happened over the past 25 years that meant the difference between life and death for those men?

Short answer: the Center Rock drill bit.

This is the miracle bit that drilled down to the trapped miners. Center Rock Inc. is a private company in Berlin, Pa. It has 74 employees. The drill's rig came from Schramm Inc. in West Chester, Pa. Seeing the disaster, Center Rock's president, Brandon Fisher, called the Chileans to offer his drill. Chile accepted. The miners are alive.

Longer answer: The Center Rock drill, heretofore not featured on websites like Engadget or Gizmodo, is in fact a piece of tough technology developed by a small company in it for the money, for profit. That's why they innovated down-the-hole hammer drilling. If they make money, they can do more innovation.

This profit = innovation dynamic was everywhere at that Chilean mine. The high-strength cable winding around the big wheel atop that simple rig is from Germany. Japan supplied the super-flexible, fiber-optic communications cable that linked the miners to the world above.

A remarkable Sept. 30 story about all this by the Journal's Matt Moffett was a compendium of astonishing things that showed up in the Atacama Desert from the distant corners of capitalism.

Samsung of South Korea supplied a cellphone that has its own projector. Jeffrey Gabbay, the founder of Cupron Inc. in Richmond, Va., supplied socks made with copper fiber that consumed foot bacteria, and minimized odor and infection.

Henninger's point, I believe, is not that the donations themselves are evidence of capitalism - donations are charity, which can exist under almost any political or economic system. And although he glosses over the crucial role of government subsidies and support in stimulating innovation, the connection between innovation and profit is not a silly one.

But why did the mine collapse in the first place? Henninger doesn't mention those details. For that, we have to go to the Associated Press:

[Chilean Senator Baldo] Prokurica said the mine operator had a poor safety record. In 2007, company executives were charged with involuntary manslaughter for the death of a miner. The worker's family settled, but the mine was closed until it could comply with key safety regulations, said Prokurica.

In 2008, the mine reopened even though the company apparently hadn't complied with all the regulations, he said, adding that the circumstances surrounding the reopening are being investigated.

President Sebastian Pinera has fired top regulators and created a commission to investigate the accident and the agency. Since the collapse, the agency has shut down at least 18 small mines for safety violations, a possible sign that lax safety measures are open secrets at many mines.

And who found the miners and brought this to the world's attention so Center Rock, Samsung, and all those other companies could donate their equipment? The Communist propaganda outlet known as the Economist explains:

[President] Piñera was visiting Ecuador with his mining minister, Laurence Golborne, when the accident happened. He immediately sent Mr Golborne back to Chile and soon followed him to the mine, reportedly against the advice of aides loth to see his image tainted by the accident. Finding the mine’s owners overwhelmed by Chile’s worst mining accident in decades, he ordered his government to take charge and called in experts from Codelco, the big state-owned copper producer.

It was a risky move, but it paid off. Probes by Codelco’s engineers found the miners still alive 17 days after the rockfall. Codelco mobilized contractors and equipment from around the world to drill three separate rescue shafts...The government has not specified the cost of the rescue operation, though Codelco says its share has cost $15m.

In short, it was the state-owned company, not the private one, that found the miners in the first place, and spent the millions of dollars necessary to rescue them. Indeed, the private company in charge of the mine is so broke that, a few days after the men were found alive, the company announced it had "neither the equipment nor the money to rescue the men." The rescue would not have been possible without state intervention.

The point here is not to claim the rescue as a victory for statism. Far from it. Yes, the mine owners re-opened their mine before meeting safety standards because they wanted to start profiting again, but the Chilean government only had eighteen safety inspectors for the entire country. While business may have influenced that woefully inadequate number, the buck still ultimately stopped with the political leaders. Neither the collapse nor the rescue can be solely attributed to capitalism or government. The credit, and the blame, lie with both.